On June 6, 2017, The Henry J. Kaiser Family Foundation published Medicare Advantage 2017 Spotlight: Enrollment Market Update. Written by Gretchen Jacobson and Tricia Newman from the Kaiser Family Foundation, Anthony Damico, an independent consultant, and Marsha Gold, a Senior Fellow Emeritus with Mathematica Policy Research and an independent consultant, the study highlights the fact that “Medicare Advantage plans have played an increasingly larger role in the Medicare program as the share of Medicare beneficiaries enrolled in Medicare Advantage has steadily climbed over the past decade.” The trend in enrollment growth is continuing in 2017, and has occurred despite reductions in payments to plans enacted by the Affordable Care Act of 2010 (ACA). The Data Spotlight “reviews national and state-level Medicare Advantage enrollment trends as of March 2017 and examines variations in enrollment by plan type and firm. It also analyzes the most recent data on premiums, out-of-pocket limits, and quality ratings.” The study can be found here.

What follows is a verbatim rendition of information, data, analysis, projections, and discussion found in the report. All credit for this information belongs to the Kaiser Family Foundation and the authors mentioned previously.

19 Million Beneficiaries Enrolled in MAPs in 2017

The report concludes that “in 2017, one in three (33%) Medicare beneficiaries – 19.0 million people – is enrolled in a Medicare Advantage plan. Total Medicare Advantage enrollment grew by about 1.4 million beneficiaries, or 8 percent, between 2016 and 2017. The growth reflects the ongoing expansion of the role of Medicare Advantage plans in the Medicare program.”

Most MAP Enrollees are in HMOs in 2017

The report indicates that “as has been the case each year since 2007, about two out of three (63%) Medicare Advantage enrollees are in HMOs in 2017. One-third of enrollees are in PPOs – with more in local PPOs (26%) than regional PPOs (7%) – and the remainder are in Private Fee-For Service (PFFS) plans (1%) and other types of plans (3%), including cost plans and Medicare Medical Savings Accounts (MSAs). Enrollment in HMOs increased by 0.6 million to 11.9 million beneficiaries in 2017. Enrollment in local PPOs increased by 0.8 million, with 4.9 million beneficiaries in local PPOs. In 2017, 1.3 million beneficiaries are in regional PPOs, similar to 2016.”

Medicare Advantage Enrollment Grew in Every State Except North Dakota

The report provides that “Medicare Advantage enrollment increased in all states in 2017, with the exception of North Dakota where enrollment declined slightly (by 1%). In eight states (AK, AL, DE, MD, NH, NJ, VT, and WY) enrollment increased by 20 percent or more.”

“In most states, the majority of enrollees are in HMOs; however, in 12 states (AK, AL, HI, IL, IN, IA, KS, KY, MI, MT, NC, and WV), the majority of enrollees are in local PPOs. Additionally, in a few states (MN, ND, and SD), the preponderance of private plan enrollees is in cost plans, which are paid differently from Medicare Advantage plans and allow enrollees to see any Medicare provider and pay the cost-sharing they would pay in traditional Medicare. Regional PPOs also play an outsized role in some states, with at least 30 percent of enrollees in regional PPOs in 4 states (AR, MS, SC, and VT).”

UnitedHealthcare, Humana, and BCBS Remain Largest MAP Firms

The report highlights that fact that “Medicare Advantage enrollment tends to be highly concentrated among a small number of firms. In 2017, UnitedHealthcare, Humana, and the BCBS affiliates (including Anthem BCBS plans) together account for well over half (57%) of Medicare Advantage enrollment. Eight firms or affiliates accounted for about three-quarters (77%) of the market, including UnitedHealthcare, Humana, Blue Cross Blue Shield (BCBS) affiliated plans (excluding Anthem), Kaiser Permanente, Aetna, Anthem, Cigna, and Wellcare. Enrollment in UnitedHealthcare’s plans grew more than any other firm, increasing by more than 800,000 beneficiaries between 2016 and 2017, and the firm’s share of the Medicare Advantage market increased from 21 percent in 2016 to 24 percent in 2017. In 2016-2017, major mergers were under regulatory review for four of these firms (Humana with Aetna, Anthem with Cigna). It is not clear how the prospect of a merger may have affected each firm’s Medicare Advantage market strategy over this period. The mergers were not allowed to proceed due to concerns about the potential effects on market competition.”

Most States are Dominated by the Three Largest Firms

The report shows that “in most states, a few firms dominate Medicare Advantage enrollment. Similar to prior years, in every state other than Oregon, the three largest firms or BCBS affiliates account for more than 50 percent of enrollment. In 38 states and the District of Columbia, at least 75 percent of enrollees are in plans offered by one of three firms. In 17 states, one company has more than half of all Medicare Advantage enrollment – an indicator that these markets may not be very competitive. Except for three states with small enrollments (the Dakotas and Alaska), all of these states are dominated by either UnitedHealthcare, Humana, or BCBS affiliated plans. (Medica Holding Company’s plans dominate enrollment in the Dakotas and Aetna’s plans dominate enrollment in Alaska.)”

Average Monthly Premium for MA-PD is $36 in 2017

The report informs that “the average MA-PD enrollee pays a monthly premium of about $36 in 2017, about $1 per month less than in 2016. Actual premiums paid by enrollees vary widely, across and within counties, by plan type and other plan characteristics. Average premiums range from $28 per month for HMO enrollees to $55 per month for local PPO enrollees and $41 per month for regional PPO enrollees. Overall, average premiums at the national level have been relatively steady for plan enrollees since 2012, although premiums for regional PPO enrollees have increased.”

Most MA-PD Plans Offered a Zero Premium Prescription Program

The report makes it clear that “in 2017, as in prior years, most Medicare beneficiaries (81%) had a choice of at least one “zero premium” MA-PD, plans that charge no additional premium for coverage of Medicare Part A, B, and D benefits , other than the monthly Part B premium. Plans can offer zero-premium MA-PDs by using their rebate (the difference between the plan bid and the maximum federal payment or benchmark) to reduce the Part D premium. While seniors have said that premiums are important factor in their plan choice, the data indicate that other factors must also play an important role. Among MA-PD enrollees with access to a zero premium plan (97% of all MA-PD enrollees), only about half (52%) are enrolled in such a plan. More than one-quarter (26%) of MA-PD enrollees with access to a zero premium plan are in plans with premiums of $50 per month or more, including 10 percent with premiums of $100 per month or more. In total, only half (50%) of MA-PD enrollees are in a zero premium plan in 2017, including about 400,000 MA-PD enrollees (3%) who do not have access to a zero premium plan.”

Out of Pocket Limits Continue to Increase

The report confirms that “in 2017, the average out-of-pocket limit for MA-PD enrollees is $5,219, about the same as in 2016 ($5,223) and up from $4,313 in 2011. HMO enrollees have generally had lower out-of-pocket limits than enrollees in local PPOs or regional PPOs, and this remains the case in 2017. More than half of all enrollees (52%) are in plans with limits above $5,000 in 2017, similar to 2016. More than one-third of all enrollees in 2017 (36%) are in plans with limits at the $6,700 maximum, similar to 2016 and up from 32 percent in 2015 and 17 percent in 2011. As out-of-pocket limits approach the maximum allowed limit, it is important to look at other dimensions of cost sharing to better understand how beneficiaries with different needs are affected by year-to-year changes and trends in Medicare Advantage cost-sharing for benefits covered under Parts A and B.”

Deductibles Also Continue to Increase

The report explains that “the standard Medicare Part D benefit in 2017, for both stand-alone prescription drug plans (PDPs) and MA-PDs, has a $400 deductible and 25 percent coinsurance up to an initial coverage limit of $3,700 in total drug costs, followed by a coverage gap (the so-called “donut hole”) where beneficiaries pay a larger share of total costs until their total out of pocket Part D spending reaches $4,950. After exceeding this catastrophic threshold, beneficiaries pay 5 percent of the cost of drugs. Both stand-alone Medicare prescription drug plans (PDPs) and MA-PDs have the flexibility to vary the cost-sharing design of their Part D benefit; however, CMS limits the plans’ deductibles and in 2017 the deductible cannot exceed $400.” In contrast, the average Part D drug deductibles for MA-PD enrollees have steadily climbed since 2011, with the largest increases between 2014 and 2016. The average Part D deductible for MA-PD enrollees is $131 in 2017, up from $128 in 2016. Enrollees in HMOs continue to have lower average drug deductibles ($108) than enrollees in local PPOs ($166) or enrollees in regional PPOs ($227) in 2017.”

Conclusion

The report concludes that “Medicare Advantage enrollment has steadily increased both nationally and across states since 2005, with one-third of Medicare beneficiaries enrolled in Medicare Advantage plans in 2017. Enrollment continues to be highly concentrated among a handful of firms, both nationally and in local markets; UnitedHealthcare and Humana together account for 41 percent of enrollment in 2017. Average premiums paid by enrollees have remained relatively flat since 2011, but out-of-pocket limits have increased 21 percent and Part D drug deductibles have increased more than 9-fold since 2011, suggesting that enrollees have less financial protection in plans than they have in the past.”

As a result, the report recommends “more granular information about benefits and plans’ cost-sharing is needed to fully understand costs incurred by beneficiaries with different service needs, how Medicare Advantage enrollees’ out-of-pocket costs compare to beneficiaries in traditional Medicare, how they vary across plans, and how out-of-pocket costs in Medicare Advantage plans have changed since the ACA. Additionally, there is a growing but still inconclusive literature on the differences in quality of care between Medicare Advantage and traditional Medicare, particularly with respect to high-need, high cost patients.”

As far as looking to the future, the report indicates “both the Congressional Budget Office and the Health and Human Services (HHS) Office of the Actuary (OACT) project that Medicare Advantage enrollment and penetration rate will continue to grow over the next decade, with CBO projecting that about 41 percent of Medicare beneficiaries will be enrolled in Medicare Advantage in 2027. As this growth continues, it will be increasingly important to assess how well the Medicare’s current payment methodology, and the competitive model behind Medicare Advantage is working to enhance efficiency and hold down beneficiary costs and Medicare spending. It will also be important to understand the implications for beneficiaries in both Medicare Advantage plans and traditional Medicare, in terms of costs, benefits, premiums, quality of care, patient outcomes, and access to providers.

For those of us involved in Medicare Secondary Payer compliance, and more importantly for auto, liability, no-fault, and workers compensation insurers, self-insureds, and third party administrator primary payers, it is important to know and understand that as Medicare Advantage takes on an even larger presence in the Medicare program, careful stewardship and oversight by primary payers is needed to make sure that as the responsible primary payer, you have built a program, or associated with a vendor, that will provide leadership, consistency, and value to your Medicare compliance program. With over 80 million beneficiaries predicted over the next 25 years, and possibly 50% of those enrolled in Medicare Advantage Plans, now is the time to build a program that will identify the claimant as a Medicare beneficiary, will document MAP enrollment, will negotiate resolution of the conditional payments with the MAP, and will secure documentation from the MAP finalizing closure of such reimbursement claim.

About Medicare Conditional Payments

42 CFR Section 411.21 indicates that Medicare conditional payments are payments made by Medicare for medical treatment where a primary payer (insurer or self-insurer) has or may have an obligation to make such payment. Primary payers must reimburse Medicare for conditional payments it has made. 42 USC Section 1395y indicates that primary payers include group health providers, workers’ compensation, liability and no-fault insurers and self-insured entities, as well as physicians, attorneys, hospitals, or clinics that receive payment from a primary payer must make reimbursement.

42 USC Section 1395y also indicates responsibility as a primary payer arises even if liability for the medical expense is contested. Such a responsibility can be demonstrated by entry of a judgment or by payment conditioned on a release or waiver of payment, even if liability is denied. 42 CFR Section 411.24 indicates Medicare has a direct right of action against all primary payers responsible for making payment. And, Medicare has a direct right of action against any person or entity that received a primary payment, including the Medicare beneficiary, medical provider, physician, attorney, state agency or private insurer.

About Medicaid Liens

42 USC Section 1396a mandates that all reasonable measures to ascertain legal liability for Medicaid payments and reimbursement of same be taken. The state or agency administering a Medicaid plan must take all reasonable measures to ascertain the legal liability of third parties to pay for care and services paid by Medicaid. Federal law also provides that in any case where such a legal liability is found to exist after medical assistance has been made available on behalf of the individual, the state or local agency must seek reimbursement for such assistance to the extent of such legal liability. 42 U.S.C. Section 1396a(a)(25).

The 2013 Strengthening Medicaid Third Party Liability Act, effective October 1, 2017, allows state Medicaid agencies or the insurers/managed care organizations contracted with to provide such benefits to seek reimbursement from any responsible third party of all payments made from the entirety of settlement, judgment, award funds, not just a portion thereof.

About Flagship Services Group

Flagship Services Group is the premier Medicare compliance services provider to the property & casualty insurance industry. Our focus and expertise has been the Medicare compliance needs of P&C self-insureds, insurance companies, and third party administrators. We specialize in P&C mandatory reporting, conditional payment resolution, and set aside allocations. Whether auto, liability, no-fault, or work comp claims, we have assembled the expertise, experience and resources to deliver unparalleled MSP compliance and cost savings results to the P&C industry. To speak with us about any of our P&C MSP compliance products and services, contact us at 888.444.4125 or info@flagshipsgi.com.

About Rafael Gonzalez

Rafael Gonzalez, Esq. is President of Flagship Services Group, the only national Medicare Secondary Payer services provider focusing on and offering comprehensive mandatory reporting, conditional payments, and set aside allocation compliance services to the property and casualty insurance industry. He speaks and writes on mandatory insurer reporting, conditional payment resolution, set aside allocations, CMS approval, and MSA and SNT professional administration, as well as the interplay and effect of these processes and systems and the Affordable Care Act throughout the country. Rafael blogs on these topics at Medicare Compliance for P&C Insurers at www.flagshipservicesgroup.com/blog. He is very active on LinkedIn, Twitter, Instagram, and Facebook. He can be reached at rgonzalez@flagshipsgi.com or 813.967.7598.